London Town shares slide further on administration rumours
Shares in London Town, the Norfolk-headquartered pub company, fell by a third this morning to 0.5p after weekend press reports suggested the group was set to go through a pre-pack administration process.
Billy Buchanan, who runs the heavily indebted company, was unavailable to comment on the reports, run in the Financial Times, which said the 407-strong pub group could go into administration - and immediately out again - as early as this Thursday, the day its shares come off AIM, the small company stock market.
London Town established itself as a pub operator three and half years ago when it bought nearly 170 pubs from property developer Jack Petchey, backed by a combination of loans, deep discounted bonds and a share placing. It has been involved in helping larger operators, notably Punch Taverns and Enterprise Inns, turn round closed pubs.
Last September, when it reported half year pre-tax losses of £2.6m, the group said it was hoping to employ 300 pub 'night watchmen' to guard boarded up pubs in order to prevent them being vandalised.
According to its interim results report London Town's pub assets are financed by a combination of bank debt, deep discount bonds, short term loans and shareholders' equity. At the same point its bank debt at 28 June 2009 amounted to £82.2m.
The group's shares have slumped from a high of 97.5p 12 months ago to today's 0.5p level.
In July last year London Town admitted that it was considering a debt-for-equity swap with its major shareholders, although nothing came of the proposal.
As recently as January 8 the company said it knew of no reason why its shares were falling so sharply in value and it was "still considering a number of strategic options" regarding its net liabilities.
